Intrinsyc Reports 2014 First Quarter Results
Intrinsyc Software International, Inc. (TSX: ICS) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the first quarter ending March 31, 2014. Intrinsyc achieved strong annual and sequential revenue growth. Revenue was approximately $2.3 million in the first quarter, up 88% from approximately $1.2 million in the first quarter of 2013 and up 40% from approximately $1.6 million in the previous quarter. Higher revenue resulted in achievement of positive EBITDA1 of approximately $102,000. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”).
“The Company is expanding its base of customers and prospects for the Open-Q™ 8074 System on Module (“SOM”), with a corresponding increase in revenue and order backlog,” stated Tracy Rees, Intrinsyc’s CEO. “As our customers increase sales of their products, Intrinsyc will benefit from repeat sales of our computing modules and/or design royalties. This shared success business model allows Intrinsyc to better align with our customer’s business and product initiatives, while enjoying the potential for greater revenue.”Business Highlights
Notable developments and achievements during the quarter include the following:
- Received an order exceeding $300,000 in value for the delivery of a custom version of the low-power, high performance, Open-Q 8060A SOM. The computing modules are expected to be delivered in the second quarter of 2014.
- Signed a design and development agreement with an original equipment manufacturer (“OEM”) for a wearable display device based on Intrinsyc’s Open-Q 8074 SOM.
- Received an order exceeding $300,000 in value for the delivery of Open-Q 8074 SOM from a previously announced customer.
- Received an order from a leading asset tracking company for the DTW 200 M2M module built by AnyDATA Corporation that is expected to exceed $850,000 in revenue; with delivery in the second half of this year.
- Signed a master supply agreement with an OEM for a custom version of Intrinsyc’s Open-Q 8074 SOM. The agreement follows a development agreement previously announced by the Company on December 12, 2013 which included a minimum commitment of 10,000 units by the OEM.
- Announced general availability of the Mobile Development Platform Tablet (‘MDP/T”), based on a Qualcomm® Snapdragon™ 805 processor from Qualcomm Technologies, Inc., a wholly owned subsidiary of Qualcomm Incorporated.
Three Month Comparative Results
The Company reported revenue of approximately $2.3 million, up 88% year-over-year, from approximately $1.2 million, and up 40% quarter-over-quarter, from approximately $1.6 million.
Gross margin2 was 41%, up from 25% in the same period in the prior year and up from 36% in the prior period. Improvements in margin were a result of higher utilization and efficiency of the Company’s engineering resources, and a one-time royalty payment by a customer for the Company’s RapidRIL technology.
Total expenses (excluding other operating expenses)3 were approximately $832,000, compared to approximately $1.1 million in the same period in the prior year and approximately $552,000 for the prior quarter. The decrease in expenses year-over-year is a result of a reduction in non-core operating expenses, while the increase quarter-over-quarter was the result of an one-time reversal of accrued bonus expenses of approximately $75,000 that occurred in the previous quarter, as well as increased sales, marketing and development expenses in the quarter related to development and marketing of the Company’s new product initiatives.
EBITDA was approximately $102,000, a substantial improvement from approximately ($792,000) in the same period in the prior year and up from approximately $30,000 in the prior quarter.
Due to the declining value of the Canadian dollar, the Company incurred a foreign exchange loss of approximately $236,000, contributing to a net loss of approximately $160,000. The company had a net loss of approximately $725,000 in the same period in the prior year, but net income of approximately $103,000 in the prior quarter.
Financial Position as at March 31, 2014
Working capital4 as of March 31, 2014 was approximately $8.6 million (which included cash and cash equivalents of approximately $4.6 million and short term investments of approximately $3.5 million). This is compared to net working capital of approximately $8.8 million as of December 31, 2013 (which included cash and cash equivalents of approximately $4.6 million and short-term investments of approximately $4.5 million).Conference Call
The Company will hold a conference call to discuss its fiscal first quarter 2014 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Mr. Rees and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed, toll-free, by dialing 1-888-340-9642, and internationally by dialing 1-416-340-8530 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. The conference call will also be broadcast live over the Internet and available for replay on the Company’s Investor Relations Conference Calls web page. Analysts and investors are invited to participate on the call. Questions may be submitted to email@example.com prior to the call.Non-IFRS Measures
The following and preceding discussion of financial results includes reference to Gross Margin, Total Expenses (excluding other operating expenses), EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company.
Total expenses excluding other operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. EBITDA is defined as operating income (loss) less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense, share-based compensation and loss on disposal of equipment which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
The Audit Committee of the Company has reviewed the contents of this news release.Forward-Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company’s future plans, objectives, performance, revenues, growth, profits, operating expenses or the company’s underlying assumptions. The words “may”, “would”, “could”, “will”, “likely”, “expect,” “anticipate,” “intend”, “plan”, “forecast”, “project”, “estimate” and “believe” or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company’s actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company’s customer’s requirements; the possibility of development or deployment difficulties or delays; the dependence on the Company’s customer’s satisfaction; the timing of entering into significant contracts; customers’ continued commitment to the deployment of the Company’s solutions; reliance on products manufactured by other companies for resale or distribution and reliance on third-party suppliers; the performance of the global economy and growth in software industry sales; market acceptance of the Company’s products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company’s reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2013. This list is not exhaustive of the factors that may affect the Company’s forward-looking information.
These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.About Intrinsyc Software International, Inc.
Intrinsyc Software International, Inc. is a product development company that provides hardware, software, and service solutions that enable next-generation embedded and wireless products. Solutions span the development life cycle from concept to production and help device makers and technology suppliers create compelling differentiated products with faster time-to-market. Intrinsyc is publicly traded (TSX: ICS) and is headquartered in Vancouver, BC, Canada.
1Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. EBITDA referenced here relates to operating income (loss) less other operating expenses.
2Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales.
3Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Total expenses excludes other operating expenses.
4Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working capital is defined as current assets less current liabilities.
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